How to prepare for the closing of the financial year in France
Companies must draw up accounts every year. For this, accounting documents must be provided that will allow to close the accounting year. But what are the documents to provide? How to go about it so that the accounting closing is not a hardship every year?
This work requires preparation and anticipation on the part of the company’s managers and all the players concerned. Here’s how to effectively prepare for the closing of your company’s financial year.
- Definition of accounting closing
A fiscal year represents the period during which a company records all the economic elements that make it possible to draw up its accounts. The fiscal year generally begins on January 1 and ends on December 31. However, you are not obliged to choose this date to close your accounts. Depending on your sector of activity, it is possible to choose another date to carry out your balance sheet.
To close the accounts, you must complete the recording of all accounting entries for the business during the relevant period. It is also necessary to gather all the supporting documents and the operations that make it possible to establish the balance sheet.
To move to a new accounting year the following year, it is necessary to have presented and filed your annual accounts with the tax authorities.
Annual accounts are not mandatory for the following cases:
- Micro-enterprises are not required to carry out an accounting closure.
- Persons carrying out an activity under the simplified tax regime do not need to produce accounting annexes.
- The different stages of the accounting close
Several intrinsically linked accounting documents are necessary to establish the annual accounts. You must close your accounting year by following the three essential steps.
The balance sheet
The balance sheet allows you to see the numbers of your business. Establishing the balance sheet allows you to see if the company is sustainable and to understand its operating cycle. This overview is particularly revealing and will allow you to best optimize the financial management of the company according to the results obtained.
The assets of the balance sheet include:
- Registration of goods stocks
- Customer, tax and social receivables
- Cash, bank accounts and other investments
- Calculation of final taxes
The liabilities of the balance sheet include:
- All of the company’s financial debts such as bank loans
- Supplier, social security and tax debts
- The equity of the company
All this information is essential for drawing up the balance sheet and optimizing the company’s accounting.
The income statement
These are all the expenses and income for the annual accounting period. The income statement provides an overview of the company’s performance during this period.
To establish the income statement, it is necessary to:
- Accounting for income and associated expenses
- Present to the tax authorities the profits and losses that the company has made during the past year. The company also provides information on its cash flow as well as its tax declaration
- Summarize the accounts to the various shareholders of the company
- Accounting for the fixed and variable costs of the company
The income statement is made up of the gross margin, the added value, the operating, financial, exceptional result and the net result.
The company’s accounting schedules
These are all of the company’s tax declarations at the end of the accounting year. You must upload the tax return to the administration to calculate the taxes within 3 or 4 months.
The accounting appendices may in particular contain the different accounting methods of the company or the table of debts and receivables with the due dates.
- Preparing the closing of the accounting year within the company
If you want to organize yourself as well as possible to plan the accounting closure of the company, you can draw up a schedule in which you will integrate the various actions to be implemented and the documents to be provided. This must be planned with the financial and operational managers. If you plan far enough in advance to complete your accounting year-end, you will be able to correct any errors.
It is also essential to involve the managers and the financial experts of the company in the preparation and the realization of the accounting closing of the company. Transmitting information on transaction flows to company bank accounts is an important step. It is therefore necessary to raise everyone’s awareness in order to optimize the preparation of the accounting closing.
Once your accounts are closed, you can open them again upon presentation of the balance of the previous accounting year. A good management of the annual accounts allows you to easily visualize all the accounting elements of the company.
To best respect the schedule in place, you can form a partnership with an accounting group. Indeed, outsourcing accounting makes it possible to meet closing deadlines but also to move on to accounting entries more quickly.
A table which makes it possible to control the figures and all the financial movements of the company is essential. In particular, it allows you to have an overall view of the financial health of the company and therefore to optimize its performance.
All companies affected by the closing of the accounting year must file their annual accounts with the Registry of the Commercial Court (Greffe du Tribunal de commerce). Once the accounting closure has been approved, you have 30 days to submit it.
As shown above, a lot of preparation must be made in order to have a smooth annual closing. If you have further questions regarding the process of annual closing in France, please feel free to contact us.